Looking at Pitchbook’s Top 5 Charts on the State of the Venture Capital World

April 26, 2022

The world is in a state of flux, and the venture capital world is no different. Here’s a look at five charts put out by private equity data provider Pitchbook on the state of the venture capital industry through the fist quarter of 2022. Quite interesting, with some surprising.

Venture Capital Investing in the First Quarter of 2022

In a perhaps surprising figure, first quarter venture capital (VC) investment came to $71 billion. This was down by $24 billion from the fourth quarter of 2020 and about $6 billion lower on a year-over-year basis. Surprisingly, although dollars flowing to the VC industry is lower, the deal count reached another high in the first quarter, reaching 4,822. This was well above the 4,098 in the fourth quarter of 2021.

Why are the new figures surprising? Well, in recent years the average dollar amount of VC investment activity had been trending upwards, but with the rising number of deals and lower dollar flows, the average deal size is slowing down. Perhaps this is a good sign for investors but should make some observers a little nervous.

Source: Pitchbook

First-time Financings

The second view – first-time financings – paints a very healthy picture. Through the first quarter, first-time financings reached $7.0 billion, which, when annualized, would reach the highest on record.

What does this figure mean? On a broader picture, it says that investors are still high on VC investment, but they’re investing smaller amounts, on average, per deal. Interesting!

Source: Pitchbook

Public Listing Activity Slows

The public markets went through a rough time in the first quarter of 2022. Given the volatile water, it’s likely no surprise that public listing activity saw significant pullback. Overall, acquisition activity came in at 224 deals, public listings saw 28 deals, and buyouts saw 58 deals. If one annualizes these figures, the picture pained equates to a slow 2022 year for public listing activity. Again, not surprising on this conclusion.

Source: Pitchbook

Momentum for VC Investing is Still High

If one is an economic pessimist for the 2022 year, the following picture is not confirming of that view. Overall, through the first three months of 2022, VC fundraising activity continues to exhibit strong momentum. Through the first quarter, capital raised reached almost $74 billion and the fund count reached 199. If these figures continue through the remainder of the year, capital raised will far surpass anything we’ve seen – ever. Interestingly, if the fund count trend continues, the number of funds will surpass all other years except 2020 and 2021, which saw 801 and 858 deals, respectively.

Source: Pitchbook

The Traditional Clusters Continue to Dominate

The last picture shown here is the percentage of all deal value by selected metropolitan areas. Unsurprisingly, the San Jose-San Francisco-Oakland, California area continues to dominate, capturing a whopping 40% of all VC money. Far behind in second place was New York-Newark, NY-NJ-CT-PA at 14%. One might have expected these two behemoths to see some slowdown given the move towards remote work, left leaning political policies, and other factors, but no, times are still good in these two very broad areas.

Source: Pitchbook

Summing Up

Overall, the state of VC through the first quarter of 2022 is quite healthy, at least according to data provided by Pitchbook. If things continue throughout the remainder of the year, 2022 could turn out, surprisingly, to be a banner year.

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